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What The Budget Means For Fleets

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Chancellor Osbourne  cancelled inflation which was due to rise next month, leaving the main rate of fuel duty fixed at 57.95 pence per litre during 2016-17.

The move will mean an annual saving of £75 a year for the average motorist, and £250 a year for small businesses with a van. The Chancellor said the freeze is a tax boost to keep Britain on the move.

However, other areas of the budget have proved worrisome for many in the fleet industry.

Fuel duty freeze not enough to keep costs down

The Freight Transport Association (FTA) believes Osbourne has missed the opportunity to boost the UK economy, by not reducing fuel duty by 3 pence per litre.

James Hookham, FTA managing director of policy and communications, said: “A further freeze of duties is welcome but the chancellor missed a chance to give a boost to the stuttering economy by reducing the tax on an essential business input.”

With the FTA estimating the cost to commercial vehicle operators at £120 million a year for every penny of fuel duty costs, they believe a 3ppl cut would have saved £350 million a year for an industry that British businesses rely on.

Further concerns point towards company car tax and allowances cuts

By 2021, plans will be put in place to transition the UK to cleaner and ultra-low emissions vehicles. The budget will allow an extension of the 100% First Year Allowance (FYA) for businesses purchasing low emissions cars. But that’s all set to change in April 2021.

That means capital allowances for business cars will be reduced from 130g/km to 110g/km of CO2. From April 2018, the FYA will reduce from 75g/km to 50g/km.

The Chancellor also announced he will continue to base company car tax levels on CO2 emissions, and will continue to refocus incentives for the cleanest cars beyond 2020-21.

BVRLA chief executive Gerry Keaney said: “While it may have been touted as pro enterprise and pro-infrastructure, this Budget gives the rental and leasing industry plenty of cause for concern.”

“It’s pleasing to see the Chancellor extend 100% first-year allowances for businesses purchasing ultra-low emission cars for a further three years until 2021, though yet again he has ignored our calls to make this benefit available for companies that lease their cars. This unfairly discriminates against SMEs who rely on lease arrangements to access new low-emission cars, and instead favours cash-rich businesses who can afford to purchase cars outright.”

The state of salary sacrifice schemes remains clouded

The budget also states limitations to be posed upon the range of benefits offered by some salary sacrifice schemes. Although the budget currently mentions changes to childcare, cycle purchase and pension schemes, the fleet industry remains unaware of cars provided under salary schemes, and will have to wait for further announcements.

The government claims it intends to maintain the attractiveness of such schemes, but it’s likely any changes will have an impact on the estimated £4,500 HMRC receives in tax revenue every year from each salary sacrifice car.

ACFO chairman John Pryor said: “Many public and private sector organisations have already introduced car salary sacrifice schemes and ACFO is aware of many others that continue to consider their implementation.

“ACFO would advise companies to be aware of the government’s review announcement when investigating the introduction of salary sacrifice arrangements.”

Investment into driverless cars

It’s not all bad news. The government has once again announced its support into the development of driverless cars. Stating they will conduct trials by 2017 on the strategic road network. There will be consultations to eradicate regulatory barriers within Parliament to allow autonomous vehicles on England’s major roads.

The budget also announced their commitment to establish a £15 million ‘connected corridor’ between London and Dover which will allow vehicles to communicate wirelessly.

Trials of truck platooning will be carried out on the strategic road network, as well as starting trials by spring 2016 to compare fuel price signs along the M5 from Bristol to Exeter, in a bid to drive fuel competition and save motorists money.

It’s clear the Chancellor’s Budget will have a direct impact on those operating in the fleet industry. The full extent of which is currently jaded until further announcements are made.

Click here to find out more about the benefits of vehicle tracking.

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